The West Bromwich Building Society has joined an intensifying battle for first-time buyers with an impressive new range of 85% and 90% LTV mortgages.

The lender has joined the battle for new custom today with 2-year fixed-rate deals on 90% LTV mortgages from just 3.49%.

Borrowers with a slightly higher deposit of 15% will be able to access a new 85% LTV mortgage at just 2.79%.

All of the deals are available from branches, over the phone or through intermediaries.

Prospective borrowers interested in the West Brom’s lowest rates will face a £999 fee, which is steep for new buyers, but the package still fares well compared to competitors.

The lowest 90% deal matches the impressive 3-year discount variable mortgage available through the Monmouthshire Building Society.

Though Monmouthshire's deal is fee free, West Brom's greater coverage and larger maximum loan size (£500,000) offers a larger range of properties for eligible customers.

The new deals ensure that the market remains competitive despite the imminent withdrawal of Funding for Lending support from the residential mortgage marketplace in January 2014.

Where Do West Brom’s 90% Mortgages Stand?

New mortgages launched in recent weeks by the Post Office and the Nottingham Building Society have improved conditions for buyers with low deposits.

The Post Office’s new deal, with its low rate and high fee, has proven a competitive addition to the market for higher value loans.

The West Brom deal goes further, undercutting the Post Office on both rate and fee, while free legal fees for remortgage customers are an added plus for those looking to switch home loans.

The Society also offers an alternative 90% product with a higher rate and lower fee (3.99% / £499). Though less impressive at first glance, it comes with a generous free valuation worth up to £525.

Both are featured in the table below to compare costs over the offer period.

As the table shows, the new deals compare well to local and national rivals – particularly for lower loan values. Interested borrowers will need to determine whether the free valuation included within the higher-rate deal (not factored into the results here) makes it a better value option overall.

Expect a property valued up to £150,000 to cost at least £200 in valuation fees – so it might be a close call.

For more about how fees affect the cost of a mortgage deal, check out our guide.

Where Does West Brom’s 85% Mortgage Stand?

The impressive new 85% deal at 2.79% is among the cheapest on the market, though it still faces strong competition from local lenders such as the Midlands-based Tipton & Coseley, which currently offers a fee-free 2-Year Tracker at 2.79% along with a fixed rate option at 2.99%.

The Marsden Building Society, based in the North West, also matches the 2.79% rate at this loan–to-value bracket, with a slightly lower fee of £798.

The Loughborough Building Society, like Tipton, offers a 2-year fix at 2.99%, while its fee is only half that of the West Brom deal.

Though undercut marginally by the Post Office's lowest-rate deal at this loan-to-value range (2.78%), the higher fee puts the West Brom's deal in a favourable position against the popular lender.

West Brom said it had launched the new deals to widen the choice available to consumers in the early stages of home ownership.

James Wright, the Society’s divisional marketing director for marketing and e-commerce, said: “Our lower deposit requirements of 10% to 15% within this range will make it more attainable for the first time buyer market.

"It should also help people with less equity in their current home who are finding it difficult to obtain a suitable mortgage in order to progress further up the property ladder."

View the full range of West Bromwich mortgages here.

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House prices went up by over 1% in November to £174,910, according to Halifax's latest index – the tenth consecutive monthly increase in prices.

This represents an 8.4% increase on the same month last year, when average standardised prices measured £161,333.

The figures also reflect a broader trend of stronger prices, which in the three months to November were 7.7% higher than in the same three months in 2012, the report added.

The acceleration in house-price inflation was attributed to strong demand and slow growth in the supply of housing.

The bank pointed to high mortgage approval numbers, as measured by the Bank of England’s seasonally-adjusted figures, which were almost a third higher in the three months to October than in the equivalent period last year.

Martin Ellis, Halifax’s housing economist, said that government schemes had helped to drive the demand for housing.

“Low interest rates, improvements in consumer confidence and official schemes, such as Funding for Lending and Help to Buy, all appear to have boosted demand,” he said.

However, price rises at the current rate were not likely to be sustainable, he suggested.

“Continuing pressures on household finances, as earnings fail to keep pace with consumer price inflation, are expected to remain a constraint on the rate of growth of house prices.”

An improvement to housebuilding levels would help to realign the balance between supply and demand and keep prices in check over the medium and longer terms, he said.

Stamp Duty

The government has been accused of cashing in on higher house prices by failing to adjust stamp duty thresholds in line with rising house prices.

Buyers currently face a 1% charge for property transactions over the value of £125,000, which rises to 3% for properties valued over £250,000.

But the Taxpayers’ Alliance has predicted that rising prices will drive three-quarters of housing over the initial stamp duty threshold within the next five years, which will generate an extra £6 billion for the Treasury.

Average stamp duty is estimated to reach 2.88% of a property transaction by 2018/19 – almost a third higher than current levels – as rising prices drive thousands of properties into higher boundaries.

Find out more about stamp duty here. Need help crunching the figures? Use our stamp duty calculator here.

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Santander is offering personal loans at knock-down rates as low as 4.5% until 18th December.

The bank has temporarily slashed the cost of its unsecured personal loans across most lending tiers to hit table-topping heights ahead of Christmas.

It follows a recent eight-day flash-sale on loans which saw rates plunge to record-low levels.

Santander’s latest December offer sees loans between £7,500 and £8,999 fall to 4.7% APR, while those between £9,000 and £15,000 fall to a market-leading 4.5% - down from 6.5% and 5.9% respectively.

The deal uncuts HSBC’s new personal loan rates of 4.8% for loans between £7,500 and £15,000, while peer-to-peer lender Zopa also offers the same competitive headline rate.

Santander has also slashed rates on smaller loans, which are traditionally more expensive, by up to half. 123 current account customers can access loans between £5,000 and £7,499 at just 6.0%, compared to 11.9% previously.

But Santander’s new loan offers are not here to stay. Loans are only available until 18th December, though the bank is promising swift decisions on all lending applications.

This may be advantageous to Sainsbury’s Bank customers with a Nectar card, who could qualify for an even cheaper deal through the supermarket bank if they can present an offer from Santander.

Sainsbury’s Loan Price Promises pledges to undercut offers on loans by 0.1% if it is beaten by another provider.

Customers may have to weigh up the value of the saving against the risk to their credit footprint that will be generated by the additional loan application within a short period.

Santander's personal loans are available for between one- and five-year periods, though customers will be charged up to 58 days interest on the remainder of their loan if they choose to repay their loan over a year before the original term is up.

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New first-time buyers are using the latest extension of the Help to Buy scheme to apply for larger homes, according to Connells Group Mortgage Services.

The agent said that almost nine in ten applications made in November using the new scheme were submitted by first-time buyers, who had applied to borrow an average of £145,000.

The scheme has encouraged lenders to provide 95% loan-to-value mortgages by offering them a guarantee worth up to 15% of the value of the property. The intention is to help buyers who would otherwise be unable to afford to raise the high deposits required to buy a home.

(Find out more about Help to Buy here.)

Its impact so far appears to have been concentrated towards the south of England, where seven in every ten applications have been made. Help to Buy has also been accused of contributing towards the latest surge in house price inflation.

But the scheme has allowed buyers to be more ambitious in their choice of property, said Connells Group Mortgage Services Director, Adrian Scott.

"Help to Buy is also having an impact in terms of allowing buyers to purchase a slightly bigger home than they might have done without the scheme," he said.

"If we consider the changing demographic of first-time buyers and the average age being 31, they may be looking for a slightly larger family home, so its great that Help to Buy can enable this type of purchase rather than having to take many small steps up the property ladder."

Funding for Lending Axed

The Bank of England recently announced that support offered to the residential mortgage market by the Funding for Lending Scheme would be withdrawn in January 2014.

But Help to Buy is fundamental for a sustained recovery in the housing market, Mr Scott added.

"As the housing market continues to recover, nothing can be more important than helping prospective buyers with that first step into home ownership.

"This isn’t just good for them but the whole market as it has a ripple effect for home movers who wish to sell their homes and move on," he said.

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Halifax has promoted itself as the go-to "challenger" bank in Scotland as it returned to the Scottish high-street following a 10-year absence.

The bank, owned by the taxpayer-funded Lloyds Banking Group, believes it is returning at a good time, as customers look to switch from their scandal-struck banks.

Ongoing troubles at the Royal Bank of Scotland (including NatWest) and the Co-operative Bank have prompted customers to switch to a new bank, aided by the new current account switching system.

Halifax was keen to re-establish itself as a "go-to" bank for Scottish customers. The bank’s Group Director, David Nicholson, described the bank as a credible challenger for consumers in Scotland.

Customers are switching to the Halifax from other current account providers at a rate of 200,000 a year, he said, which is more than any other brand.

The bank is offering a £100 cash incentive for people to switch to one of its current accounts, while the reward account offers customers £5 per month if they remain in credit and pay in £750. It has also announced a cashback scheme worth up to 15%.

However, the rate of switching appears to have slowed by around a quarter since May, as other competitive deals have emerged ahead of the launch of the new switching system in September.

Why are Brits switching current accounts?

The latest TNS Global current account switching index showed that Halifax was attracting the third largest number of switchers at 13%, behind parent bank Lloyds at 14% and Santander at 21%.

Though it continues to attract plenty, Halifax's net gain has only been 4% of switchers since the new seven-day system launched.

According to the TNS index, the bank has lost 9% of switchers to other banks, while its parent bank Lloyds has lost a huge 20%.

Santander has attracted a large number of switchers despite its poor reputation for customer service.

Its innovative combination of interest worth up to 3% on balances up to £20,000 and cashback worth up to 3% on everyday utility bills has proved an irresistible mix for consumers.

The Nationwide Building Society has also performed well, attracting 11% of switchers. The mutual's FlexDirect account offers 5% interest on balances up to £2,500 for the first twelve months – a rate made more attractive by the continued fall in the average returns on savings accounts.

Have you joined or left the Halifax this year? Is it the "go-to" bank it claims to be? What enticed you to join the bank, or to leave it for another provider? Let us know in the comments below.

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Lloyds Banking Group has received a record fine of £28 million for running an aggressive bonus scheme that incentivised staff to sell products that were profitable for the bank rather than suitable for the customer.

The Financial Conduct Authority said mis-selling took place across the entire banking group – Lloyds TSB, Halifax, and Bank of Scotland – adding that the fine was the largest that had ever been issued for retail misconduct.

Tracy McDermott, the FCA director, said that the fine had been increased by 10% because Lloyds had faced a previous fine in 2003 for the mis-selling of bonds and had failed to heed its lessons from the past.

Salespoints

The regulator said that the bank’s failings related to the sale of ISAs and select income protection insurance products between 2010 and 2012.

The systematic failure was the bank’s ‘salespoints’ system, which incentivised staff to prioritise products that were lucrative to the bank rather than those that were suitable for customers.

Last year, a number of employees turned whistleblower on the bank, revealing the constant pressure they faced to hit salespoint targets. They feared demotion or the sack if they failed to deliver.

Read more about it on our Finance Blog: Salespoints, Selling and Scandals, Lloyds TSB (September 2012).

At the same time, there were lucrative bonuses on offer for those who matched their targets. In some cases, these were worth over a third of an employee’s monthly salary.

Ill-Awarded Bonuses

The FCA delivered a damning verdict on Lloyds’ behaviour and its decision to reward staff even when their sales were considered illegitimate.

229 staff were awarded bonus payments "even when all of their assessed sales were deemed unsuitable or potentially unsuitable", the FCA found.

"The incentive schemes led to a serious risk that sales staff were put under pressure to hit targets to get a bonus or avoid being demoted, rather than focus on what consumers may need or want," Ms McDermott said.

"Customers have a right to expect better from our leading financial institutions and we expect firms to put customers first - but firms will never be able to do this if they incentivise their staff to do the opposite," she added.

Too Little, Too Late?

Earlier this year, the bank announced a series of measures to revamp its incentive scheme, which is now more focused on customer service.

But this came months after Barclays and the Co-operative Bank pledged to clean up retail banking by offering rewards for customer service rather than sales.

And even then, the changes announced in March only form a partial reconfiguration of the incentive scheme, with sales performance still forming part of an annual bonus package.

Lloyds pledged at the time that “before any variable payment is made, colleagues will still need to pass a vigorous set of measures that ensure everything they do generates the right outcome for customers”.

But customers have shown signs of losing trust in the bank. According to a recent index by TNS Global, one in five of those who have switched their current account since the launch of the new seven-day switch system in September decided to leave Lloyds for another provider.

Have you experienced aggressive selling practices by Lloyds (or another bank)? Would it persuade you to leave the bank for one which valued customer service? Let us know by leaving a comment below.

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Tesco Bank has announced that its current account range will finally launch in 2014, adding further competition to the market.

The bank’s chief executive, Benny Higgins, said the bank was “making excellent progress” towards the launch of its current account and should begin a test period early in the New Year.

A number of technical difficulties have caused several major delays to the launch of the bank’s current accounts.

But with several major banks facing another round of scandal, including Lloyds’ £28 million record fine for mis-selling tactics, Tesco is now looking to make an immediate impact in the marketplace.

The launch of a new seven-day current account switching system in September has also made it easier than ever for consumers to switch banks, and figures suggest that the new system is gathering momentum.

Extra for Consumers (and Jobs!)

Tesco’s new current accounts have been designed to meet the demands of the supermarket’s customers, Mr Higgins said, and will offer “simplicity, transparency, convenience and the need for loyalty to be rewarded”.

He added that the bank would be targeting the supermarket’s huge customer base, which includes 16 million Clubcard holders, rather than customers from other banks.

The launch will also see the creation of 300 jobs in Edinburgh and Glasgow, adding to its 4,000-strong workforce across the two cities and in Newcastle.

The bank already offers a comprehensive range of personal finance products, including savings accounts, credit cards, insurance, loans and mortgages.

But Mr Higgins described the current account as “the last brick in the wall of becoming a real bank”.

Tesco bought its banking operation outright from the Royal Bank of Scotland five years ago, which recently admitted decades of underinvestment in its IT systems after suffering a fourth glitch in less than 18 months.

And Mr Higgins insisted that the current accounts would not be launched until existing customers had been moved to a new computer system.

But there would be an emphasis on online account management, he said, rather than opening an extensive branch network.

Would you be tempted to switch to Tesco? If you’re a regular Tesco shopper, what rewards would you like to see from its new current account? Leave us a comment and let us know.

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The credit card market remains awash with 0% balance transfer deals, but new research suggests that customers who take on these offers are still struggling to reduce their debts.

A report from Consumer Intelligence suggests that over a third of consumers who take out a 0% balance transfer offer fail to clear their debts before the offer period ends.

Customers are left with an average of around £2,400 after their 0% deals had ran out, it said.

The report also found that around one in five customers had seen their 0% offer terminated prematurely after they had failed to make the minimum monthly payments on their credit cards.

Longer Balance Transfers, Higher Costs

Credit card providers have steadily increased the duration of their 0% balance transfer offers in recent months.

Barclaycard, which has traditionally set the pace over recent years, extended to an unprecedented 30 months earlier in the autumn before reverting back to 29 months.

But average interest rates have crept upwards as a result, meaning that those who fall outside the introductory period end up paying far more to service their remaining debts.

David Black, banking specialist with the firm, said that balance transfer deals remained a useful tool for consumers to reduce their debts without the additional burden of interest.

However, he noted there had been no clear correlation between longer offers and consumers’ ability to pay off their debts in full.

“It is clear that substantial numbers of customers are still not able to clear debts despite [0% offers] becoming longer and longer,” he said.

Massive Burden of Debt

The findings will be of concern, with new Bank of England figures showing that Britain’s total personal debt stands at a colossal £1.43 trillion.

A ‘Maxed Out’ report released in November by the Centre of Social Justice found that personal debts had reached a “massive” level, with the average household owing over £54,000, including mortgages.

But the increasing cost of living, and particularly energy bills, has contributed both to the debt level and to the inability to repay debts in full.

The energy regulator, Ofgem, says that the average debt owed to gas and electricity companies has almost quadrupled in the ten years to 2011.

And the revelation that customers are struggling to repay credit card debts at a zero-percent rate is indicative of the higher borrowing and rising costs that have propelled many into a serious debt trap in recent years.

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First-time buyers appear to have benefited from the government's new lending schemes after experiencing the largest increase in lending for six years in October.

Figures from the Council of Mortgage Lenders (CML) show that banks and building societies provided 26,800 mortgage loans to first-time buyers during the month of October – the highest number since November 2007.

This represents a 16% increase from September, and a 33% increase from October 2012.

The amount advanced to new buyers was also up by 48% on the previous year, to £3.7 billion, which may reflect the decision of many first-time buyers to opt for a larger home.

Connells Group Mortgage Service suggested recently that the second phase of the Help to Buy scheme, which launched in October, had allowed buyers to be “more ambitious in their choice of property”.

However, the figures also demonstrate greater affordability. While the average mortgage value for first-time buyers reached a high of £119,500, average income levels also reached a record level of £36,460.

The figures also emphasise how first-time buyer lending has continued to propel the mortgage market.

Overall house purchase lending rose to £9.7 billion, spread across 60,800 loans, while buy-to-let lending also exceeded £2 billion as the number of loans advanced to landlords rose by 11% from September to 16,200.

"After years of a relatively flat mortgage market, 2013 has shown signs of lending turning a corner and looks set to finish the year strongly," said the CML's Director General, Paul Smee.

"Increased financial optimism among the public as the economy recovers seems to be driving this upward trend and it is welcome to see that first-time buyers continue lending momentum as more look to own their first home," he added.

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Challenger banks Virgin Money and Aldermore have joined the government's Help to Buy scheme in a bid to help new buyers purchase their first home.

The banks are both offering fixed-rate mortgages at 90% and 95% loan-to-value, with Virgin offering terms up to five years.

Virgin’s rates for buyers with a 5% deposit start at 5.29% for a two-year fix, while a three-year fix will cost 5.39% and a five-year fix will cost 5.49%.

The two-year deal is bettered by other Help to Buy deals from the RBS Group (4.99%) and elsewhere, while three-year deals are available for as little as 3.75% (Monmouthshire).

But Virgin’s five-year deal does match the best Help to Buy offer available at that term.

The mortgages have no arrangement fee, which is an advantage, and buyers will be able to claim £300 cashback to put towards other costs such as legal and valuation fees or Stamp Duty charges.

Buyers able to raise a 10% deposit will be able to save up to one whole percentage point from these rates through Virgin, which has also decided to offer 90% LTV loans through the guarantee scheme.

90% mortgages will start at 4.29% for a two-year fix, with a three-year fix costing 4.69% and a five-year fix costing 4.89%.

Though cheaper options are available to buyers at this loan-to-value range, only the Monmouthshire deal is fee-free, which makes Virgin's cashback-laden offer more competitive overall.

Anthony Mooney, Director of Financial Services at Virgin Money, said that the positive response to the scheme had led the bank to join earlier than planned.

"It is encouraging to see that the scheme has got off to a strong start, and we are pleased to be widening the choice of products available to those looking to get on to or move up the housing ladder," he said.

With no fee and £300 cashback, Virgin's new 90% mortgage competes well for relatively low value loans.

Aldermore, one of Britain’s newest banks, will offer re-mortgages as well as new purchases through Help to Buy.

The bank’s two-year fix at 95% LTV undercuts the Virgin deal by a fraction, at 5.28%, but a £999 fee does make it more expensive than other participating deals.

For a similar fee, deals can be found at much cheaper rates at the same loan-to-value range (e.g. RBS / NatWest at 4.29%), while HSBC’s no-fee deal at 4.59% also comprehensively outguns the smaller lender.

Rise of the Challenger

The banks are both hoping to provide a strong alternative to the big high-street lenders, who have been known to reject applicants because of contentious or disputed issues with their credit files.

Rejections have been made over even more trivial issues, such as formatting inconsistencies with customers’ personal details.

(How do you access your credit file to check for errors? Find out in our new guide.)

Large banks also tend to operate centralised decision-making systems which cannot be overruled.

The launch of TSB in September saw its boss, Paul Pester, promote simpler ‘local’ banking. But even he had to admit that lending decisions would remain centralised as long as the bank remained under Lloyds’ risk parameters.

Therefore, space remains in the market for local lenders and more-widely accessible challenger banks to offer high loan-to-value mortgages to those who have experienced little joy with larger lenders.

Aldermore's director of residential mortgages, Charles Haresnape, said: "We are committed to lending to home-owners in the UK, especially those with small deposits, to get on the housing ladder and those who are unable to access mortgages from traditional high street lenders, despite being creditworthy.”

Despite the sympathies shown by smaller lenders, experts are warning aspiring homeowners to be wary of exceeding overdraft limits or missing credit card payments over the festive period, which could damage their credit rating and affect their chances of securing a mortgage.

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Average house prices in the UK are now within reach of the £250,000 mark, according to the Office of National Statistics, after rising by 5.4% in the year to November.

The latest House Price Index from the ONS suggests that prices are rising throughout the country, reaching an average of £248,000.

Overall, the pace of house price growth remains strong across all parts of the UK, it said.

The annual growth figure showed a slight drop to 5.4% in November from 5.5% in October, but solid month-on-month growth of 0.5% kept prices rising steadily ahead of the Christmas season.

As expected, the market remains strongest in London, where annual growth of 11.6% is more than double the national average. Average prices in the capital are now at £441,000, the report indicates.

Stamp Duty

One downside to the rise in average prices is that thousands of home-movers will be subject to higher stamp duty charges.

Homebuyers currently face a charge of 1% when they purchase a property priced above £125,000, but this rises to 3% when the price reaches £250,000.

Find out more about stamp duty charges here.

But among the fastest rising prices are the property types sought by first-time buyers, which rose by 6.4% in the year to November.

This can be attributed in part to Government schemes including Funding for Lending and Help to Buy, which have improved the availability of high loan-to-value mortgages and driven up demand from first-time buyers.

The Help to Buy scheme was extended in early October, three months ahead of schedule. The number of participating lenders continues to grow, with Santander and the Post Office becoming the latest to join the scheme.

Prices Boost Confidence

The consistent rise in house prices has inspired conference in the UK property market, and especially in the north of England.

92% of homeowners expect property prices to rise over the first half of 2014, according to the latest Housing Market Sentiment Survey from Zoopla - the highest level in four years.

“Early indicators suggest that we can look forward to a busy first few months to 2014,” said Zoopla's Lawrence Hall.

Meanwhile, the percentage who expect prices to fall has fallen to just 3%, compared to 19% a year ago – a factor which is prompting more people to think about buying a property.

Additionally, the withdrawal of Funding for Lending support from the residential mortgage sector is yet to impact upon mortgage rates.

As we highlighted yesterday, local lenders continue to challenge the big banks with 95% LTV mortgages.

The 4.79% discounted variable rate mortgage offered by the Hanley Economic Building Society is one of the most competitive deals on the market at this loan-to-value range.

Find all the latest mortgage deals here at Which4U.

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Are you paying over the odds for your credit cards, loans, or mortgages? Consulting your credit report might help you determine whether you could apply for better rates on your lending.

Why is Your Credit File Important?

Your credit file is an important dossier of information. It includes the most recent six years’ worth of records concerning your application, lending, and repayment history.

The records are kept by credit reference agencies – namely Callcredit, Equifax, and Experian – and help lenders to assess your creditworthiness.

The strength of your credit report is a vital factor in a lender’s decision to accept or reject an application for credit. It may also determine the strength of the deal you are offered.

If you apply for a long-term 0% balance transfer credit card, for example, a lender witnessing a ‘good’ rather than an ‘excellent’ credit score may decide to offer a shorter term than the advertised maximum.

You are entitled to purchase a copy of your report for £2 from any provider. Equifax and Experian offer a one-month free trial, which grants unlimited access to a user's credit report, but you will need to cancel if you wish to avoid the monthly fee.

Find out more about what you can expect to find on your credit report.

Maintaining and Improving Your Credit Score

There are measures you can take to manage your credit history and avoid the issues that will look unfavourable to a lender.

One standard rule is to avoid making too many applications in a short space of time. Lenders may see this as a sign of desperation, or decide that you hope to take out more than one source of credit at the same time.

Other factors that may influence your credit score are the amount of credit you use and the number of applications you make.

Lenders want to see that you handle sensible amounts of credit responsibly. It is likely to raise alerts if you are regularly maximising your credit card limits or applying for new credit too frequently.

For young people who are not homeowners and who have not yet completed a payment agreement, specialist credit-building products can help to build up a solid impression of your creditworthiness.

General Dos and Don’ts to Improve a Credit Score

Do:

• Make sure you’re on the electoral roll.
• Pay bills on time. Just a few days late can make a difference.
• Check regularly for mistakes or incorrect details on your credit record.
• Apply for credit when you need it – applying for more than 4 forms of credit in a year can lower your credit score.
• Consider specialist credit card providers which help people to improve a credit record.
• End financial associations with ex-partners. Taking out a product jointly with them will affect your credit score.

Don’t

• Use more than around 75% of your available credit limit, where possible.
• Apply for more than one credit product at a time. Each application can negatively impact your credit score.
• Leave old credit card accounts and direct debits open if they are no longer needed.
• Take out more than two forms of credit within a six month period.

Find out more about the determinants on our finance blog.

The Possibility of Cheaper Deals

Learning more about your credit score is important, for a number of reasons.

Firstly, it gives you the chance to query mistakes if you encounter them.

Secondly, it will help you take steps to correct any wrongs.

Thirdly - and perhaps most importantly - a good credit score is the gateway to cheaper credit, which could allow you to save hundreds on your existing deals.

Credit Cards

While personal loan rates have steadily fallen in recent years, average credit card rates have been creeping towards 18%.

On that basis, transferring a credit card balance of £2,000 to a 0% deal for 24 months (a dozen cards are currently available at this term or longer) could save upwards of £350 in interest over the term if the balance is paid off evenly.

Mortgages

A little over two years ago, we were celebrating the availability of 90% LTV mortgages at a then-knockdown rate of 5.39% (Halifax, Yorkshire BS).

Fast forward to 2014, and the best deal currently available at this loan-to-value range is almost two percentage points lower, at 3.48% (Post Office).

On a £150,000 mortgage, this would save more than £3,600 (£160 per month) over the two-year offer period.

Soft-Searching

Initiating a so-called ‘soft search’ will allow you to view your credit report without registering more activity on it. And understanding what lenders see when they process an application will help you to make more realistic judgements about what to apply for.

Without an excellent credit score, applying for a table-topping deal is less likely to be successful. But discovering that you have established a good credit history will allow you to apply for cheaper deals with a measure of confidence.

Helpfully, some banks now alert their current account customers if they have been pre-approved for a credit card - a handy indicator that an application will not be wasted. Why not ask your bank if they operate a pre-approval system based on your history with them?

If New Year resolutions involve getting on top of your finances, you can't go too far wrong in getting your hands on your credit report and using that to assess whether savings could be made through cheaper forms of credit.

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The number of property valuations increased by more than a third in 2013 as existing homeowners looked to secure better mortgage deals.

Figures from chartered surveyors Connells show that the number of valuations grew by 35% last year, with the pace of growth accelerating towards the end of the year.

November proved to be a record-breaking month for property valuations, following the expansion of the Help to Buy scheme, while December saw a 12% rise on the same month in 2012.

Remortgaging activity was particularly strong after rising by more than half, Connells said, as homeowners looked to release equity in their homes and secure better mortgage rates.

The impact of Government schemes such as Funding for Lending and Help to Buy were also evident as valuation activity surpassed pre-crisis levels. 7% more valuations were carried out for first-time buyers in 2013 than the year before.

Connells’ John Bagshaw said the level of housing market activity seen at the end of 2013 had stunned sceptics.

“Confidence in the property market has reached levels not seen for more than five years, and some months have even surpassed 2007 levels of activity,” he said.

“The valuations industry is gearing up for an even busier 2014.”

Why the Rush to Remortgage?

There are several reasons why large numbers of homeowners have taken measures to remortgage their properties.

Most notably, home loan rates continue to be low and ultra-competitive. In 2011 we were celebrating the availability of 90% LTV mortgages at a then-knockdown rate of 5.39%.

The best deal currently available at this loan-to-value range is almost two percentage points lower, at 3.48%, via the Post Office. On a £150,000 mortgage, this would save more than £3,600 (£160 per month) over the two-year offer period.

For those who have built up more equity in their homes, an 80% LTV remortgage option is available at 2.39% with a fee of just £200 (West Bromwich), while a 60% LTV remortgage is available from just 1.63% (Post Office) – though a slightly higher rate and lower product fee may prove cheaper depending on the size of the mortgage.

But these rates are not likely to last forever. The Funding for Lending Scheme, which has contributed towards cheaper mortgage rates since August 2012, is now being redirected towards small business lending.

And any rise in the Bank of England interest rate as the economy stabilises and unemployment falls will adversely affect any mortgage lenders not already on fixed-rate deals.

So, many are looking to tie into cheaper deals for the foreseeable future while rates are low, fully aware that failing to act now could see a priceless cost-cutting opportunity pass them by.

For more information, why not check out our related guides:

• Remortgages Explained.
• First-Time Buyers: Where to Begin.
• Mortgage Arrangement Fees: Working Out the Best Deal.
  

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The West Bromwich Building Society has laid down the gauntlet to rivals by reducing a number of its 2-year fixed-rate mortgages at higher loan-to-value levels.

The society, which has featured regularly in our mortgage reviews, has reduced its 2-year fixed rate mortgage at 85% LTV to just 2.79% and its 90% LTV rate to just 3.64%.

Both mortgages have a modest fee of £499 and a free valuation worth £525, while remortgage customers will also benefit from free legal fees.

At 2.79%, the 85% LTV mortgage compares favourably to big-name competitors.

Though the Post Office marginally undercuts it at 2.78%, the larger fee of £1,495 makes the West Bromwich deal far more attractive.

Stiffer competition is more likely to come from local lenders. The Hanley Economic Building Society matches the West Bromwich deal on rate and even slightly undercuts it on fees (£350), while house purchase customers receive £250 cashback on competition.

The Coventry Building Society is also sporting an attractive 85% mortgage at 2.75%, with a fee of £999.

Both of these are variable rate deals, however, which will make them less competitive if there is a rise in the Bank of England base rate during the mortgage term. By contrast, West Bromwich customers have the advantage of security against rate increases for the first two years.

Find out more about fixed rate vs. variable rate mortgages here.

The 90% deal also rates highly among big-name competitors. At 3.64%, it comes with a fee of £499 but a free standard valuation worth up to £525.

Once again, the Post Office offers a cheaper deal at 3.48%, but this comes at a hefty cost of £1,495. This will only outperform the new West Bromwich deal if the mortgage is large enough that the savings made from the lower rate can offset the extra thousand pounds in fees over the two-year term.

A cheaper rate is also on offer from HSBC at this loan-to-value range (3.59%), but the fee of £1,499 is unlikely to threaten the West Bromwich mortgage on overall cost. Home buyers with an HSBC current account can save £500 on the booking fee for many of its most competitive deals, however.

Find out more about working out the best deal accounting for rate and fees.

Once again, in terms of overall cost the stiffest competition is likely to emerge from local lenders. West Brom’s 90% mortgage is surpassed convincingly by the Monmouthshire Building Society’s discount variable rate mortgage (3.25%), but this is limited to postcode areas in Wales and south-west England.

You can view the latest deals from the West Bromwich Building Society here.

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Hundreds of thousands of consumers have taken advantage of the new seven-day switch system to move to a new bank.

The Payments Council has revealed that over 300,000 consumers switched their current account in the final three months of 2013 – an increase of 17% on the same three-month period in 2012.

Over 100,000 applied to switch in November as awareness of the new system grew and banks offered new perks to attract disenchanted consumers.

The run-up to Christmas saw 83,729 apply to join a new bank – an increase of over 50% on the same month in 2012.

Research by TNS Global last year found that a combination of poor customer service and rewards had persuaded customers to switch.

33 banks and building societies are signed up to the new £750 million switch service, which is designed to help current account holders switch banks within seven days.

The system includes a redirection service that automatically forwards any payment instructions to or from the old account to the new account for 13 months.

It also comes with a Switch Guarantee to ensure that customers are reimbursed of any charges if the transfer goes wrong.

(Find out more about the new switching system with our guide.)

"An Encouraging Start"

The Payments Council says that 59% of the general public are now aware of the switching service – a number it hopes will rise with a new round of advertising.

Its chief executive, Adrian Kamellard, said the numbers showed “an encouraging start”.

“With the launch of new service we have set out to eradicate any concern customers may have had in the past about switching their current account, and although our work isn’t yet done, we have got off to a great start,” he said.

“Even though the Current Account Switch Service only launched a few months ago most people are already aware of it and are confident in it.”

How Can Customers Ensure A Smooth Transfer?

Banks and building societies have reported that mismatching information has been the main cause of delays to the transfer process.

If customers apply for a new account with a recently changed name or address that is not listed with their old bank, it will be more problematic for banks to authorise the switch.

Banks are recommending that customers provide a recent bank statement to the new current account provider to ensure that the details match up.

Customers can also speed up the transfer by providing the details of their existing debit card to their new bank or building society, which will allow the necessary checks to be done more efficiently.

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Barclays will unveil two Help to Buy mortgages tomorrow (21 January) as competition gathers pace for new homebuyers.

The bank will offer 95% loan-to-value mortgages at three-year and five-year fixed-rate terms with no fee.

The three-year fix will be available at 5.35%, with the five-year deal costing 5.49%.

The three-year deal is more costly than the majority of Help to Buy deals available at shorter terms, though it does offer the security of an extra year.

RBS, NatWest, and Santander are offering two-year fixed-rate deals at 4.99%, while HSBC is offering a two-year fix at 4.79% with a £99 fee.

Some of these deals also offer impressive perks, with Santander offering free valuation fees, £250 in cashback, and 1% cashback on mortgage payments every month for 123 current account holders.

New homebuyers interested in the shorter-term deal from Barclays will have to weigh up whether to take on the extra cost for the security of a third year at 5.35%.

At 0.36% above the majority of two-year deals, repayments on a mortgage of £150,000 would cost around £32 more per month – an extra £761 over the first two-years.

The five-year fix from Barclays, at 5.49%, is in line with its major Help to Buy competitors, matching RBS, NatWest, Halifax, and Santander.

Andy Gray, managing director of mortgages for Barclays, said: "We're pleased to be joining the Government's Help to Buy mortgage guarantee scheme and supporting first-time buyers and home movers get on, or move up, the housing ladder."

"This builds on our existing and on-going participation under the Help to Buy equity scheme."

Find out more about the Help to Buy scheme here.

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Rental costs are falling as increasing numbers of renters secure a mortgage to purchase their own home.

The cost of rent in England and Wales fell by 1% in December compared to the previous month, according to LSL Property Services, while annual rent growth (3.2%) has fallen to half the rate seen a year ago.

As may be expected, London remains the most expensive area for rent, after growth of 4% took the average monthly cost to £1,131 – almost £400 above the national average.

But the majority of regions registered a fall in rental costs from November to December, as competition between lenders for high loan-to-value mortgages has encouraged more first-time buyers back to the market.

Thousands of frustrated renters have spent years trapped by rising rental costs, which have prevented them from building the deposit levels required by risk-averse banks.

But schemes such as Help to Buy have helped them to secure a mortgage and make the decisive move to own their own property. In turn, this appears to be taking some of the steam out of an overheated rental market.

Rental arrears saw a noticeable rise in December, when almost 10% of all rental payments was late or unpaid. This represents a rise of almost 50% on November's figures.

David Newnes, the director of LSL Property Services, blamed the difficulties that tenants are experiencing on the disparity between rising housing costs and stagnant wages.

"The culprit is wages, which haven't kept pace with the rising cost of living for years," he said.

But he suggested that conditions could improve, for tenants and landlords alike, as the recovery continues.

"Early indications show wage expectations are starting to look up, and general inflation is under control again,” Mr Newnes said.

"If this can take hold, more prosperous tenants will make for a more prosperous private rented sector in 2014."

Banks are expected to continue making their buy-to-let offers more competitive, hoping to entice more people to look towards property as an investment opportunity.

But prospective landlords will note market conditions, and must establish whether rental charges are likely to be affordable in the current climate.

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2014 has seen the strongest ever start to a year for house prices, according to Rightmove's latest House Price Index.

The average house price has risen to £243,861 in January, following a 1% rise on the previous month.

The firm described this as the largest January increase since its index began twelve years ago.

The figures present a slightly lower average price than the £248,000 recorded by the Office of National Statistics for November, but also an accelerating rate of annual growth (6.3%) thanks to a strong January.

Rightmove attributed the strong growth in prices to a low supply of housing coinciding with strong demand. It said that only 58 properties are listed for sale per agency branch – the scarcest stock of property since February 2007.

Those in areas of particularly low supply will enjoy additional pricing power, Rightmove suggests.

A number of consumers have already identified 2014 as a good time to cash in on the market conditions, with the number of newly marketed properties rising by 4% in the first week of January compared with early 2013.

Equally, though, the level of interest in properties over the first fortnight of 2014 has risen by 20% on the same period last year.

More than 1.75 million enquiries were made about moving home during this period, suggesting that demand will keep driving prices upwards.

Sellers "Salivating"

Miles Shipside, Rightmove director and housing market analyst, said sellers would be “salivating” at the prospect of selling at a higher price, and this could bring additional supply back to the market.

"The sums have to stack up for most property owners before they will consider a sale; some will have to achieve a higher sales price to fund a move while others will have a figure in their heads that they’re not prepared to go below," he said.

"With buyer demand on the up and price levels having hardened, the likelihood of finding a buyer at an acceptable price will be a potential boost to new seller numbers."

He also welcomed the extension of the Help to Buy scheme, which came into effect in October.

The scheme was recently attacked by the chief executive of Legal & General, Nigel Wilson, who blamed Help to Buy for inflating demand and driving house prices in London and the South East to "absurb" levels.

However, Mr Shipside defended the scheme, suggesting that it is liberating sections of the market occupied by homeowners looking to move up the housing ladder.

"Help to Buy phase two will assist new supply further by helping to increase the availability of low-deposit mortgages for existing home-owners, finally enabling ‘trapped sellers’ to move," he said.

Find all the latest mortgage deals here at Which4U.

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The average deposit required by homebuyers fell by 6% between October and December last year, the Mortgage Advice Bureau said, as more took advantage of higher loan-to-value mortgages.

The Bureau said the improved availability and affordability of high LTV mortgages had helped homebuyers with lower deposits to secure a suitable loan.

Deposit levels fell to an average of £66,259 across the final quarter – around 6% below levels in September – despite house prices continuing to rise steadily across the country.

The typical loan-to-value rose from 69.3% to 71.2%, the Bureau said, which demonstrates the impact of the second phase of Help to Buy at the end of 2013.

Introduced in October to support buyers with low deposits, Help to Buy has provided lenders with a guarantee worth up to 15% of the value of a mortgage when they supply mortgages worth up to 95% LTV.

(Found out more about Help to Buy here.)

Reassuringly, the effect has been more pronounced in high-demand areas where prices are rising faster, the Bureau said. Typical deposits fell by 7% in Greater London and by 12% in the South East.

The scheme has also sparked competition in the marketplace, with non-participating lenders also competing to offer low-deposit mortgages.

Brian Murphy, head of lending at the Mortgage Advice Bureau, hailed the impact of the scheme for promoting competition in higher loan-to-value categories.

"Raising a deposit has long been the biggest challenge for first time buyers in the current climate," he said.

"Until recently when property values have improved, even homeowners were struggling with limited equity in their properties to support their next purchase.

"It's encouraging to see a situation emerging where deposit requirements need not block aspiring buyers from taking advantage of growing choice and improving rates."

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A dramatic fall in the rate of unemployment will be putting homeowners and future buyers on red alert over the coming months, as the prospect of rising interest rates grows ever more likely. So, what's the situation, and what are the decisions to make?

The UK unemployment rate has fallen drastically to 7.1%, according to the Office of National Statistics (ONS), and it is now close to the point at which the Bank of England will seriously consider raising interest rates.

The Bank has held interest rates at 0.5% for almost five years, seeing out the worst years of the credit crunch. In August, new chief Mark Carney reassured the markets through his preferred ‘forward guidance’ policy that rates were unlikely to rise until unemployment had fallen to 7% - a level not expected until 2016.

But now that the jobless rate has already fallen to within a whisker of that target, the Bank of England is back under pressure to signify when it might consider raising interest rates again, which will have a knock-on effect for mortgage payments.

Are interest rates about to go up?

It is inevitable that interest rates will rise as the recovery continues and the economy strengthens. Exactly when this will happen is unclear. But the Bank of England may reconsider its earlier position to investigate a rate rise when unemployment reaches 7%.

Inflation has recently fallen to its target rate of 2%, offering plenty of room to manoeuvre, while wage inflation also remains subdued.

And despite a larger-than-expected fall in unemployment, the minutes of the Bank’s latest Monetary Policy Committee meeting in January suggested there would be “no immediate need to raise the Bank rate even if the 7% unemployment threshold were to be reached in the near future”.

What the steep drop in unemployment does suggest is that one of the factors that will determine an interest rise is moving much faster than anticipated.

The Bank will be expected to acknowledge this and explain how its ‘forward guidance’ policy matches up to new developments. And with luck, it may decide to set further goals to give the markets, banks and consumers additional time to prepare for a rise in rates.

How does this uncertainty impact upon mortgages?

Those who are currently sitting pretty on a fixed-rate mortgage deal might well be feeling pleased with themselves right now, since their rates are fixed for the duration of the term.

Homeowners with a variable rate or ‘tracker’ mortgage will feel most at risk from the uncertainty regarding future interest rate rises. Any increase in the Bank of England base rate will be passed on to these mortgage customers, resulting in higher costs.

On a £200,000 mortgage, a rise from 4.00% to 4.25% would result in an increase of around £28 per month, or £336 per year. A rise to 4.50% would result in an increase of around £56 per month, or £672 per year.

(Find out more about fixed-rate vs. variable rate mortgages.)

Those who are considering buying a property or remortgaging their home might also be starting to get jittery, as banks and building societies begin to tighten their offers on fixed-rate deals.

Already, five-year fixes are being withdrawn as banks anticipate the growing probability that interest rate will be rising over the forthcoming years.

It is also worth noting that the support from the Funding for Lending Scheme, which has contributed towards lower lending rates in the last 18 months, has been withdrawn at the start of this year.

Therefore, it looks increasingly unlikely that rates will remain rock bottom for much longer, regardless of the Bank of England’s plans for the immediate future.

New buyers and existing homeowners will have to act quickly to secure the best rates – with only fixed-rate deals guaranteeing security against the impact of any interest rate rises over the next year or so.

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